‘Surprising’ proportion of investors not using property managers

New research has exposed the ultimate needs and wants of landlords, with a larger than anticipated percentage choosing to opt out of property management services altogether.

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A survey conducted by realestate.com.au titled Landlords’ Needs and Wants Research, July 2016 found that 84 per cent of landlords engage a leasing agent or property manager to assist with their investment properties.

Speaking to Smart Property Investment, REA Group’s chief economist, Nerida Conisbee, said the figure wasn’t what she expected.

“It did surprise me that it was only 84 per cent — I thought it would be closer to 100 per cent,” Ms Conisbee said.

“But perhaps that other 16 per cent are just self-managing and perhaps have relatively easy tenants that they don't need a property manager for.”


Ms Conisbee said despite 16 per cent of landlords not using professional services to manage their properties, the majority of investors would still be using a leasing agent when it comes to listing their properties.

“The main reason being is that often the agent has got a database of people who are potentially interested,” she said.

“They also have better mechanisms to advertise and the like.”

The survey also revealed that 92 per cent of landlords placed importance on letting agents making the best use of technology.

Asked what forms of technology this refers to, Ms Conisbee said it can include things like the use of tenant databases to find the right tenant.

“There is a product called 1Form that tenants can use to apply online, where they fill in the form once and then they can apply for lots of properties using the one form,” she said.

“Even using our website, realestate.com.au, to advertise leasing.

“Now you can get out and advertise to a lot of people online. It's far more difficult for a potential tenant to contact lots and lots of real estate agents, so when they can go online and have a look at all properties it's a lot easier.”

According to the research, a notable proportion of landlords invest before owning their own home (33 per cent).

Ms Conisbee believes that this is a combination of people still living at home, and people still renting themselves — also known as rentvestors.

“When you have a look at the types of people investing, they're often either families or couples, so they're less likely to be living at their parents’,” she said.

“So I would say a lot of them are rentvesting, but there are obviously a fair proportion of people that live with their parents as well.”

The research also found that one in two landlords prefer couples as tenants.

“The least popular [tenant type] was families with young children, and also groups of friends,” Ms Conisbee said.

“I think the groups of friends one is partly that they tend to be a little bit more likely to have parties and, it's pretty stereotypical, but they would be more likely to be up late and perhaps a little more noisy than a couple, who probably have a little bit more of a stable lifestyle.

“Similarly with young children, young kids can be quite destructive.”

According to the research, two most ideal tenant types are someone who looks after the property like their own home (38 per cent), and someone who always pays rent on time (37 per cent).

Ms Conisbee suggests that another ideal tenant type is someone who is in the property for a long time.

“People who are able to stay at least for the full lease term,” she said.

“So the full 12 months, or potentially longer, I'd imagine would be seen as an ideal tenant as well.

“If you've got a really great tenant in your property, they're looking after the property and they're paying rent on time, I would say that would be the ideal tenant because every time someone finishes up their lease, then you've got to re-let, and you've got potential downtime on your leasing payments.”

However, Ms Conisbee said there is a potential benefit to having a high tenant turnover.

“One thing that's potentially good when you do have higher turnover of tenants is that you have the opportunity to increase your rent each time — but that's only in a strong market.”

“If you're in a suburb where there is lots and lots of rental demand — in Sydney that’s the inner-west and northern beaches, and in Melbourne it’s inner suburban areas — then it may be better to have a higher turnover of tenants because you can potentially up your rent each time they move out.”

“But I think for the majority of people owning investment properties, they just want someone in there that can look after the property, pay their rent, and provide cash flow.”

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